Installment Payments Unavailable to LLC in Court Decision
In Michigan, when a judgment is entered against a defendant, that Defendant is generally entitled to ask the court for permission to pay that judgment in installments.
In a breach of contract case settled this year, the parties agreed that Defendant, a Limited Liability Company (LLC), would pay $51,000 to the Plaintiff. The Plaintiff sought and received a judgment from the court enforcing the settlement agreement.
Defendant LLC sought court approval to pay the judgment in installments under MCR 3.104 and MCL 600.6201. The Plaintiff argued that those sections only apply to individuals and not to business entities. In support of its argument, the Plaintiff cited another portion of the Act that discusses what must be included with a petition for installment payments. That section states that the petition must include an affidavit showing an inability to pay a lump sum with the funds earned as wages by that party. Since limited liability companies do not receive wages, Plaintiff argued, they are not entitled to make installment payments.
The Macomb County Circuit Court held that the purpose of the statute and court rule is to protect individuals from having their wages garnished while still allowing creditors to protect their interests. Defendant, as a business entity, is not at risk of having wages garnished. Further, the court agreed that Defendant failed to provide sufficient evidence supporting its inability to pay.
For these reasons, the Court denied Defendant’s motion for installment payments and ruled in Plaintiff’s favor.
If you have questions about this or other legal topics, please contact the experienced legal team at Fausone Bohn, LLP at (248) 380-0000 or online.